Andrew ‘Twiggy’ Forrest wont be paying the mining tax.
Photo: Glenn Hunt
Nothing builds public disenchantment with a tax like rich people finding ways to avoid it.
In what will be painful reading for many people, this morning’s news reveals that Fortescue Metals, the company responsible for making Andrew Forrest the fourth wealthiest person in the country, won’t be required to pay the minerals resource rent tax this year.
The failure of a key area of policy reform to have a meaningful impact on the government’s finances is a bad look in an election year. But the idea that the country’s wealthiest miners have successfully outmanoeuvred the imposition of a new tax may be even more vexing for voters.
On February 8, federal Treasurer Wayne Swan did his best to lower expectations by announcing that the mining tax would raise just $126 million in its first six months of operation despite earlier estimates it would bring in $2 billion this year.
“It’s clear revenues from resource rent taxes have taken a massive hit from the impact of continued global instability, commodity price volatility and a high dollar,” Mr Swan said last week.
This is true but revenue has also been cut by the ability of miners to write off asset values from their mining tax liabilities.
Fortescue, BHP Billiton and Gina Rinehart’s joint venture partner Rio Tinto have been able to accrue enough tax credits to avoid the tax altogether.
Regardless, Rinehart has had the mining tax in her sight for some time. Last year, she used it as evidence to support her argument that Australia was becoming too expensive.
“We are becoming a high-cost and high-risk nation for investment,” she said.
This morning, the Minerals Council of Australia has continued the fight, taking out full page advertisements in daily newspapers to “correct the record” on the mining tax. The advertisements refer to the not-insubstantial $130 billion in tax the industry has paid since 2000.
“The new Minerals Resource Rent Tax must be kept in perspective,” it says. “It is a top-up on iron ore and coal if and when it is ‘super profitable’.
“It’s separate from, and in addition to, the company tax and royalties the industry continues to pay.”
The mining industry has proven adept at selling its own importance in an otherwise subdued economy to voters through extensive advertising campaigns.
But a better way to get the rank and file on side may be to demonstrate that the country’s wealthiest miners are feeling the pinch too.